The Reject Shop (TRS)

The Reject Shop
reported a 16 per cent slump in net profit last week, pushing its shares down to a closing price of $12.68 yesterday, their lowest level since October 2009. The Reject Shop is certainly not alone in suffering through a tough period for retailers, with many reporting sharp declines in profit and the pain looks set to linger, with sales in January and February below expectations. Stores in the flood-affected areas of Queensland are still closed, and its Ipswich distribution centre is not expected to be fully operational until early in the next financial year. The closure continues to disrupt supply, which may further weigh on sales which are already fighting against sustained weakness in consumer spending. Macquarie reduced its target price to $14.00, from $14.50, last week. Although Macquarie described the current half as a “write-off", longer-term growth plans have stayed on track, with store expansion going ahead as planned.